CHAN KWOK KAM v. NG & SHUM SOLICITORS, NG SIU PANG

FAMV No. 16 of 1999

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 16 OF 1999 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM CACV No. 211 OF 1998)

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DETERMINATION

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Mr Justice Litton, Acting CJ:

1. This is the determination of the Appeal Committee.

2. This application for leave to appeal to the Court of Final Appeal arises from an action started by the applicant Mr Chan Kwok Kam against the defendants, a firm of solicitors, in March 1998. By his statement of claim indorsed in the writ Mr Chan claimed against the solicitors a sum of $2,782,419 arising from a failed property transaction in the Mainland. The transaction was between Mr Chan as the purchaser and a Mainland company called Bai Hua Property Development Co. Ltd. as the vendor relating to two units in a commercial building which the company was developing. The sale and purchase agreements were signed in May 1994 and provided for completion on 30 December 1996. The agreements stipulated that stage payments should be made to the solicitors. The statement of claim went on to allege that Mr Chan had paid the sum of $1,041,250 and a further sum of $33,338.16 described as "the balance of solicitors' fees". These sums were paid to the solicitors. But when the units were inspected it was found that the internal area was only approximately half of what it should have been. It appears from the statement of claim that Mr Chan never took possession of the units. Mr Chan by his writ issued in March 1998 claimed as against the solicitors the return of the sums paid, a penalty equivalent to these sums and $633,243 by way of interest, making a total claim of $2,782,419.

3. As can be seen, the parties to the sale and purchase of the two units were the company as vendor and Mr Chan as purchaser. No facts have been pleaded which might give rise to some duty owed by the solicitors to Mr Chan. On the face of the statement of claim the solicitors were acting for the company and received the purchase price as agents for the company. There is an averment that the solicitors acted as an "intermediary" but this, on its face, is not an allegation that the solicitors held any part of the purchase price as stakeholders and were therefore accountable to Mr Chan as stakeholders for part (or all) of the purchase price when the transaction failed.

4. The solicitors took out a summons under Order 18 Rule 19 of the Rules of the High Court for the statement of claim to be struck out as disclosing no cause of action against them. This was heard by a Master who acceded to the application and ordered the action to be dismissed.

5. Mr Chan appealed to a Judge in chambers under Order 58 of the Rules of the High Court. For reasons which have not been explained the Judge who heard that appeal (Deputy Judge W. Wong) entertained evidence from Mr Chan (including a newspaper cutting) and after a full hearing dismissed the appeal and affirmed the Master's order.

6. Mr Chan then appealed to the Court of Appeal. By that court's judgment dated 30 April 1999 the appeal was dismissed. On 22 June 1999 the Court of Appeal refused leave to appeal to the Court of Final Appeal. Hence the matter now before us.

7. It is important to bear in mind the scope of the proceedings dealt with by the courts below. The summons taken out by the solicitors under Order 18 Rule 19 sought to impeach the pleadings: That is to say, the way Mr Chan had set out his case in writing. It was open to the Master, in ordering the statement of claim struck out, not to go on to order that the action be dismissed: He could have afforded Mr Chan an opportunity to re-formulate his case, to allege some breach of legal duty on the solicitors' part, if the circumstances so warranted. It is not for us to say whether the circumstances justified this course or not. On the face of the statement of claim - which was ultimately what the courts below were concerned with, and concerned with only - no breach of duty on the part of the solicitors was alleged. No facts were pleaded which could arguably have made the solicitors liable to pay to Mr Chan the sum of $2.78m as claimed, or any other sum. There is no prospect of the Court of Final Appeal being persuaded that the Master's order was wrong.

8. This application for leave to appeal is dismissed.